November 10, 2012

Corruption and Property Rights: a teachable moment.

Chris Blattman does the two step to argue against the UK focusing its aid on tackling corruption:

1. It’s not that important (doesn’t have a big impact on economic development).

2. There may not be much aid donors can do to tackle it.

I kind of agree with him but it’s hard not to stub your toes on a couple of his blind spots when he writes: “To be clear, my point wasn’t that corruption is unimportant. But if we’re talking about where the world ought to focus it’s aid energy for the next fifteen years, I simply wouldn’t use corruption in the same sentence (or even paragraph) as civil war or property rights.”

Would the world really want to focus it’s aid energy on civil war? Given that most developing countries aren’t experiencing it? And given that while aid can probably help in war zones it’s unlikely to an elixir of peace.

More importantly though, it’s always struck me as strange that economists (and in Blattman’s case econ leaning pol scientists) appear to think that property rights are something that exist as some sort of strange ideal form – you need them; you have them; you don’t have them; simple – that isn’t embedded in institutions. In fact, I would have said that if you view property rights as important for development, you would be concerned with corruption. You’ll need an un-corrupt Ministry of Lands and court system at the very least if you want clear secure property rights.

This isn’t a trivial point. It seems to me, as a relatively un-informed outsider, that the World Bank’s, unhappy, De Soto meets Cambodia train crash, happened exactly because they conceptualised property rights as something independent from larger socio legal and political power relations.

Personally, I doubt there is a lot that aid agencies can do to sustainably tackle corruption on average across countries (but this will vary from country to county); but I also doubt there is a lot that aid agencies can do to magic-up broadly distributed, just and secure property rights in developing countries too.

And finally, I’m curious: is there actually that much evidence that property rights themselves are causally linked to development improvements. The theory is quite convincing, and we have Acemoglu type evidence of good institutions generally having a positive impact, which is then theorised to be mediated via property rights, but do we have actual unambiguous evidence on property rights themselves?